The minerals industry is expected to pay a record $23.4 billion in taxes and royalties to Federal and State Governments in 2010-2011 new research from Deloitte Access Economics (DAE) shows.

Minerals sector company tax is expected to reach $14.6 billion in 2010-11, exceeding the previous peak of $13.2 billion in 2008-09 and 42 per cent above average company tax payments of the previous three years.

State royalties from the minerals sector are expected to reach a record $8.8 billion for the 2010-11 financial year. Based on DAE estimates for 2010-11, royalty payments by minerals resources companies to State and Territory Governments have risen at an average annual rate of 25 per cent since 2004-05.

The combined company tax and royalty figure of $23.4 billion in taxation revenue in 2010-11 is greater than the Commonwealth’s annual expenditure on Australia’s defence forces.

When royalties are added, mining is clearly among the highest taxed industries in Australia. Audited company statements show that major mineral resource companies paid effective tax rates (company tax and royalties) in the range of 36-43 per cent in 2008-09.

The new DAE estimates are contained in the Minerals Council of Australia’s Quarterly Economic briefing note released today.

Over the decade to 2008-09, the net corporate tax rate on mining income (including oil and gas) averaged 28.1 per cent. This is 25 per cent higher than the total all industries rate of 22.5 per cent. While mining accounts for around 8 per cent of GDP, the industry’s share of net company tax paid in Australia rose to around three times that level (23.8 per cent) in 2008-09.

The claim that traditional revenue sources from mining are unresponsive to movements in commodity prices is wrong. The revenue contribution from mining to Federal and State Governments has risen in line with higher commodity prices.

Company tax and royalty payments combined have risen four-fold as a share of GDP over the last decade.

Treasury analysis of “Mining Boom Mark 1” (roughly 2004-05 to 2008-09) found that around a third of the additional national income attributable to the boom went to Commonwealth revenues.

The Quarterly Economic Note is available via the download link below.

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